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After plunging to Rs 68 a kg in Tamil Nadu's wholesale markets, coconut oil prices have rebounded to Rs 80 a kg. The smart recovery in palm kernel oil prices to Rs 70 a kg and revival in demand are attributed as some of the prime reasons for the price recovery of coconut oil.
Coconut oil prices were quoting at Rs 80 a kg in Kerala markets as well, Mr Prakash B. Rao, Vice-President of the Cochin Oil Merchants Association (COMA), said.
Palm kernel oil is not only seen as a substitute, but is usually used in adulteration of coconut oil when price differentials are quite marked, sources in the trade said. Palm kernel oil prices were reigning as low at Rs 58 a kg last week. There was fair amount of short-covering in the futures market also that generated demand in the spot market, Mr Talat Mehmood, President of COMA said.
The price recovery was also expected as the prices had plunged from a high of Rs 104 couple of months ago, Mr Mehmood said.
Superior quality
The quality of coconut oil produced in Kerala is often superior and most often commands a better price, sources in the trade said. They expected the price differentials to re-emerge, and Kerala coconut oil prices to be higher in the coming days.
Poorer availability of coconut oil is also reported to be another factor affecting prices. But for some of the northern districts of Kerala, there are virtually no surplus copra production from the state.
The Tamil Nadu production has also been affected as local body elections are on in the State and arrivals into Kerala are also down, Mr Anandan, Former Secretary of COMA, said. The impending North-West monsoon is expected to affect conversion of coconut into copra and further into coconut oil. The availability is likely to decrease in the coming weeks and the prices could remain firm.
Meanwhile, there is fair amount of demand, both from Kerala and upcountry buyers, which is helping prices. The industrial demand for copra and coconut oil had also revived, helping the prices to remain firm.
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